Social Security is one of the most common income funds for retirees. But did you know Social Security most likely won’t cover all your expenses in retirement? In fact, according to a recent USA Today article and data from the Bureau of Labor Statistics, Social Security and private pensions make up only half of the income for the average retirement-aged household. The other half is made up of other income like savings, investments, and real estate.
If you’re wondering where that other half of income will come from, you’re not alone. While Social Security is an income fund that retirees can count on, there are other income funds that should be part of your retirement portfolio. It’s never too early to start saving and investing for retirement. Here are some of the best income funds for retirees.
Roth IRA Retirement Accounts
As a general rule, you should be saving 15-20% of your income for retirement. The first step is to invest that money in a Roth IRA or 401k retirement account. Depending on your age, you could watch that money grow into a substantial nest egg.
Most people don’t know that your Roth IRA contribution limit increases when you turn 50 years old. If each person in your household is contributing to a Roth IRA, you can each increase your individual contributions per year when you turn 50 years old. The maximum amount you can contribute is based on your income, but here’s a general breakdown:
- Under 50 years old: $6,000 max (2019) or $5,500 max (2018)
- Over 50 years old: $7,000 max (2019) or $6,500 max (2018)
Consistently saving a percentage of your income is your surest bet at preparing for retirement.
An automated savings plan is a smart strategy for piling up cash. Set up an automatic withdrawal of a percentage of your income every month. Keep it in a money market account and don’t touch it unless you have an emergency.
Investing in real estate is also a great income stream for retirees. If a property is ready for tenants, you can rent it out and collect monthly rent. A real estate investment is an easy way to see a return on your investment. If you have the wherewithal to take on the duties of a landlord, a real estate investment can become a lucrative hobby in your retirement years.
If you’re considering one of these investment options, contact the experts at Sterling Advisor Group. Prepare for a retirement and set up a meeting with a financial partner today.